Correlation Between Dow Jones and Lumina Gold
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Lumina Gold at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Dow Jones and Lumina Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Lumina Gold Corp, you can compare the effects of market volatilities on Dow Jones and Lumina Gold and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Dow Jones with a short position of Lumina Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Lumina Gold.
Diversification Opportunities for Dow Jones and Lumina Gold
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dow and Lumina is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Lumina Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumina Gold Corp and Dow Jones is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Dow Jones Industrial are associated (or correlated) with Lumina Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lumina Gold Corp has no effect on the direction of Dow Jones i.e., Dow Jones and Lumina Gold go up and down completely randomly.
Pair Corralation between Dow Jones and Lumina Gold
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.35 times more return on investment than Lumina Gold. However, Dow Jones Industrial is 2.86 times less risky than Lumina Gold. It trades about 0.37 of its potential returns per unit of risk. Lumina Gold Corp is currently generating about -0.02 per unit of risk. If you would invest 4,176,346 in Dow Jones Industrial on September 1, 2024 and sell it today you would earn a total of 314,719 from holding Dow Jones Industrial or generate 7.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dow Jones Industrial vs. Lumina Gold Corp
Performance |
| Timeline |
Dow Jones and Lumina Gold Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Lumina Gold Corp
Pair trading matchups for Lumina Gold
Pair Trading with Dow Jones and Lumina Gold
The main advantage of trading using opposite Dow Jones and Lumina Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Lumina Gold can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Lumina Gold will offset losses from the drop in Lumina Gold's long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| Lumina Gold vs. Bluestone Resources | Lumina Gold vs. Kore Mining | Lumina Gold vs. Torq Resources | Lumina Gold vs. Regulus Resources |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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